India’s manufacturing grows 5.5% in November despite the note ban

Belying expectations of a slowdown due to demonetization, industrial production in November grew by 5.7 percent compared to a contraction of 3.4 percent in the same month a year ago.

Factory output measured in terms of Index of Industrial Production (IIP) got a push in November 2016 due to better performance of manufacturing, mining and electricity sectors coupled with the larger offtake of capital goods, considered a barometer of investment.

Following demonetization of Rs 1,000 and Rs 500 notes announced on November 8, 2016, it was feared that cash crunch will hit all sectors.

According to data released by the Central Statistics Office today, IIP for the month of October last year was revised slightly upwards to a contraction of 1.8 per cent from provisional estimates of (-) 1.9 per cent released last month.

As per the data, IIP growth during April-November period this fiscal remained almost flat at 0.4 per cent compared to 3.8 per from provisional estimates of (-) 1.9 per cent released last month.

As per the data, IIP growth during April-November period this fiscal remained almost flat at 0.4 percent compared to 3.8 percent a year ago.

The manufacturing sector, which constitutes over 75 percent of the index, grew by 5.5 percent in November compared to a decline in output by 4.6 per cent earlier.

However, during the April-November period, the sector recorded a contraction of 0.3 percent compared to a growth of 3.9 per cent.

Similarly, electricity generation grew at 8.9 per cent in November compared to a meager 0.7 percent a year ago. Mining output grew 3.9 per cent in November compared to 1.7 per cent same month a year ago.

Capital goods production increased by 15 percent in November compared to a decline in production by 24.4 per cent earlier.

As per use-based classification, growth rates in November 2016 over November 2015 are 4.7 per cent in basic goods and 2.7 percent in intermediate goods.

Consumer durables and consumer non-durables recorded growth of 9.8 per cent and 2.9 per cent respectively, with the overall growth in consumer goods being 5.6 per cent.

In terms of industries, 16 out of 22 industry groups in the manufacturing sector have shown growth during the month of November 2016 as compared to the corresponding month of last year.